Derivative Instruments and Hedging Activities. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. SFAS 133 requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure the instrument at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. SFAS No. 133 and subsequent amendments, SFAS No. 137 and SFAS No. 138, are effective for the Company on January 1, 2001. The Company does not expect the adoption of Statement 133 to have a material adverse impact on the Company's financial condition or results of operations because the Company does not use derivative instruments other than interest rate cap agreements.
Derivative Instruments and Hedging Activities. We utilize various derivative instruments to (i) manage our exposure to commodity price risk, (ii) engage in a controlled trading program, (iii) manage our exposure to interest rate risk and (iv) manage our exposure to currency exchange rate risk. We record all derivative instruments on the balance sheet as either assets or liabilities measured at their fair value under the provisions of SFAS 133, "Accounting for Derivative Instruments and Hedging Activities" as amended by SFAS 137 and SFAS 138 (collectively "SFAS 133"). SFAS 133 requires that changes in derivative instruments fair value be recognized currently in earnings unless specific hedge accounting criteria are met, in which case, changes in fair value are deferred to Other Comprehensive Income ("OCI") and reclassified into earnings when the underlying transaction affects earnings. Accordingly, changes in fair value are included in the current period for (i) derivatives characterized as fair value xxxxxx, (ii) derivatives that do not qualify for hedge accounting and (iii) the portion of cash flow xxxxxx that is not highly effective in offsetting changes in cash flows of hedged items.
Derivative Instruments and Hedging Activities. (a) For purposes of this Section 3.24, (i) a “Derivative Instrument” is any financial instrument or other contract that is accounted for as such under SFAS 133, as amended by SFAS 149, irrespective of whether or not such instrument or contract has been designated as a hedging instrument, (ii) a “Normal Purchase or Normal Sale Instrument” is any commodity contract, or component thereof, which qualifies for the normal purchase and sale exception provided by SFAS 133, as amended by SFAS 149, and (iii) “Risk Management Instruments” shall mean each instrument, contract or binding commitment to which the Company or any Subsidiary is a party which is a Derivative Instrument or a Normal Purchase or Normal Sale Instrument.
Derivative Instruments and Hedging Activities. In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities.” SFAS No. 161 requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. SFAS No. 161 is effective for fiscal years beginning on or after November 15, 2008. The Company is currently evaluating the potential impact of the adoption of SFAS No. 161 on its consolidated financial statement disclosures. However, the Company does not expect the adoption of SFAS No. 161 to have a material effect on its consolidated financial statements.
Derivative Instruments and Hedging Activities. In June 1998 the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Certain Hedging Activities. In June 2000 the FASB issued SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activity, an Amendment of SFAS 133. SFAS No. 133 and SFAS No. 138 require that all derivative instruments be recorded on the balance sheet at their respective fair values. The Company adopted SFAS No. 133 and SFAS No. 138 on September 1, 2000. There were no transition amounts recorded upon adoption of SFAS 133. We utilize certain derivative instruments to enhance our ability to manage risk relating to cash flow exposure. Derivative instruments are entered into for periods consistent with related underlying cash flow exposures and are not entered into for speculative purposes. On the date into which the derivative contract is entered into, the derivative is designated as a cash flow hedge. To limit exposure to differences in the U.S. dollar, British pound sterling, Italian lira and Mexican peso exchange rate fluctuations, we enter into and designate forward contracts to hedge certain of the JABIL CIRCUIT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) forecasted cash outflows. We document all relationships between hedging instruments and hedged items, as well as our risk-management objectives and strategies for undertaking various hedge transactions. Changes in the derivative fair values that are designated, effective and qualify as cash flow xxxxxx are deferred and recorded as a component of "Accumulated other comprehensive income (loss)" until the underlying transaction is recorded in earnings. In the period in which the hedged item affects earnings, gains or losses on the derivative instrument are reclassified from "Accumulated other comprehensive income (loss)" to the Consolidated Statement of Earnings in the same financial statement category as the underlying transaction. We assess, both at the inception of the hedge and on an on-going basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items. During the year ended August 31, 2001, we recorded the change in value related to cash flow xxxxxx amounting to a gain of $0.2 million in "Accumulated other comprehensive income (loss)". There were no amounts related to the ineffectiveness of our ...
Derivative Instruments and Hedging Activities. We utilize various derivative instruments to (i) manage our exposure to commodity price risk,
Derivative Instruments and Hedging Activities. On the date a derivative contract is entered into, the Bank designates the derivative as either a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge), a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge), a foreign-currency fair-value or cash-flow hedge (foreign currency hedge), or a hedge of a net investment in a foreign operation. The Bank currently has only fair value xxxxxx pertaining to $175 million in outstanding FHLB advances. For all hedging relationships the Bank formally documents the hedging relationship and its risk-management objective and strategy for undertaking the hedge, the hedging instrument, the item being hedged, the nature of the risk being hedged, how the hedging instrument's effectiveness in offsetting the hedged risk will be assessed, and a description of the method of measuring ineffectiveness. This process includes linking derivatives that are designated as fair-value xxxxxx to specific liabilities on the balance sheet. The Bank also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the fair values of the hedged items. Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a fair-value hedge, along with the loss or gain on the hedged liability that is attributable to the hedged risk, are recorded in earnings. The ineffective portion of the change in fair value of a derivative instrument that qualifies as a fair-value hedge is reported in earnings. STOCK-BASED COMPENSATION The Bank accounts for stock-based compensation using the intrinsic-value-method under Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employers" and related interpretations. Accordingly, no compensation expense has been recognized for stock options issued with an exercise price equal to the stock's market value at the date of grant. The Bank has recorded compensation expense related to any issuances of options at exercise prices less than market value of the Bank's stock at the date of grant. Financial Accounting Standards Board ("FASB") Statement No. 123, "Accounting for Stock-Based Compensation," as amended by FASB Statement No. 148, "Accounting for Stock-Based Compensation -- Transi...
Derivative Instruments and Hedging Activities. In July 2003, the Bank entered into interest rate swap transactions with embedded options for $175 million of convertible advances from the FHLB that are designated as fair value xxxxxx. These xxxxxx are designed to convert fixed rate borrowings into floating rate borrowings and to eliminate any call risk to which the Bank had been subject. The $175 million notional interest rate swaps convert the fixed interest rates that the Bank was paying on three separate advances from the FHLB at interest rates ranging from 4.42% to 5.50% to floating interest rates of 3-month LIBOR plus spreads ranging from 174 to 231 basis points. The embedded option gives the Bank the right to convert the fixed rate received under the interest rate 67 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) swaps to a 3-month LIBOR rate. This right will be exercised if the FHLB calls and the Bank converts the advances held by the Bank into 3-month LIBOR instruments. Under the contractual terms of the advances, the Bank can choose to convert each advance into either a floating or fixed interest rate at then current market prices based upon the then current product listing offered by the FHLB. With the embedded option, the Bank eliminated any interest rate risk associated with the call provision of the FHLB advances. The effectiveness of the fair value hedge is evaluated quarterly. The hedge was effective through December 31, 2003. By using interest rate swap contracts with embedded options to hedge exposures to changes in interest rates and call risk, the Bank exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the interest rate swap contract. When the fair value of the interest rate swap contract is positive, the counterparty owes the Bank, which creates credit risk for the Bank. When the fair value of an interest rate swap contract is negative, the Bank owes the counterparty and, therefore, it does not possess credit risk. The Bank minimizes the credit risk in its interest rate swap contracts by entering into transactions with high-quality counterparties whose credit rating is A or higher or by requiring the counterparty to deposit with us qualifying collateral. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. Under its interest rate swap agreements, the Bank is receiving a payment that is based upon a fixed interest rate and paying amo...
Derivative Instruments and Hedging Activities. We utilize various derivative instruments to (i) manage our exposure to commodity price risk, (ii) engage in a controlled trading program, (iii) manage our exposure to interest rate risk and (iv) manage our exposure to currency exchange rate risk. Beginning January 1, 2001, we record all derivative instruments on the balance sheet as either assets or liabilities measured at their fair value under the provisions of SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” as amended by SFAS 137 and SFAS 138 (collectively “SFAS 133”). In accordance with the transition provisions of SFAS 133, we recorded a loss of $8.3 million in Other Comprehensive Income (“OCI”), representing the cumulative effect of an accounting change to recognize, at fair value, all cash flow derivatives. We also recorded a noncash gain of $0.5 million in earnings as a cumulative effect adjustment. SFAS 133 requires that changes in derivative instruments fair value be recognized currently in earnings unless specific hedge accounting criteria are met, in which case, changes in fair value are deferred to OCI and reclassified into earnings when the underlying transaction affects earnings. Accordingly, changes in fair value are included in the current period for (i) derivatives characterized as fair value xxxxxx, (ii) derivatives that do not qualify for hedge accounting and (iii) the portion of cash flow xxxxxx that is not highly effective in offsetting changes in cash flows of hedged items.
Derivative Instruments and Hedging Activities. On January 1, 2001, the Company implemented FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" and Statement No. 138 "Accounting for Certain Derivative Instruments and Certain Hedging Activities." The Company has designated its gold forward contracts as normal sales as defined by Statement No. 138 and these contracts are therefore excluded from the scope of Statement No. 133. Foreign exchange contracts and gold call options have not been designated as xxxxxx for U.S. GAAP purposes and are recognized at fair value on the balance sheet with changes in fair value recorded in earnings. Gains and losses on the early termination or other restructuring of gold, silver and foreign currency hedging contracts are deferred in accumulated other comprehensive income until the formerly hedged items are recorded in earnings. The transition adjustment recorded under U.S. GAAP at January 1, 2001 decreased assets by $18.3 million, liabilities by $54.4 million and net earnings by $3.1 million, and increased accumulated other comprehensive income by $39.2 million. RECENT ACCOUNTING PRONOUNCEMENTS In 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations, which is effective for fiscal years beginning after June 15, 2002. The Statement requires legal obligations associated with the retirement of long-lived assets be recognized at their fair value at the time that the obligations are incurred. Upon initial recognition of a liability, that cost should be capitalized as part of the related long-lived assets and allocated to expense over the useful life of the asset. The Company will adopt Statement 143 on January 1, 2003. Due to the number of operating facilities that the Company maintains, the expected impact of adoption of Statement 143 on the Company's financial position or results of operations has not yet been determined.
